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Internet rates may go up as DoT decides to levy fee on it

New Delhi, Aug 30, 2013 (PTI):

Using the Internet may become up to 30 per cent costlier as the Department of Telecom today issued corrigendum to the new telecom licences agreement bringing revenue from these services under its cess net.

As per the initial version of the Unified Licence on August 2, DoT had exempted Internet services revenue from adjusted gross revenue (AGR) -- part of telecom company's earnings on which annual licence fee is levied.

It had said that AGR will be calculated after deducting revenue from pure Internet (access and content) services, sales tax paid to the government and roaming revenue paid to other operators from the total revenue earned by telecom service providers.

However, in the corrigendum on calculation of AGR DoT has said: "Revenue from Pure Internet Service under heading B-Deduct stands deleted."

Under the new licences, telecom operators (including Internet Services Providers will have to pay uniform licence fee of 8 per cent annually on AGR.

The Internet Service Providers Association of India has warned the step would lead to hike in consumer rates by up to 30 per cent.

ISPAI president Rajesh Chharia said the move is a "major setback in broadband penetration specially in rural India, as there will be cascading effect and license fee on multi point will increase broadband price by 30 per cent".

He added that ISPs are in bad condition already and this will worsen their situation."The whole Internet broadband business will become pure monopolistic, which is not good at all for the country. Only 1 or 2 big player will survive and they will take the benefit of monopoly market," Chharia said.

All new telecom services providers are required to take Unified Licence, while existing companies will have to migrate to the new licence on expiry of their permits for continuing their business.

According to recent report by analytics firm comScore, India has by passed Japan to become the world's third largest Internet user after China and the US with 74 million Internet users.As per telecom regulator Trai, there were 15.13 million subscribers at the end of May.